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Extraction of company asset

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Pesky IFA has been at it again. Client wants to transfer company asset to himself. Company has nominal share capital but is of significant value. 

IFA has come up with wheeze - new holding company formed by share-for-share, with significant share capital/premium. Asset transferred intra-group and then out to client as a capital reduction with CGT at 10% 

To be fair, it looks good on paper (and might even have worked in years gone by) but I intend to tell client that it won’t because (a) HMRC are unlikely to give clearance on the share-for-share and (b) even if we could come up with a convincing story for (a) the strategy is right in the middle of Transactions in Securities. 

Correct?

Replies (7)

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By SteLacca
02nd Oct 2019 08:38

Not to mention that it's an artificial sequence of transactions put in place for the sole purpose of avoiding tax, so falls foul of anti-abuse rules (and I take your point about coming up with a convincing story, but this would simply make you complicit).

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Replying to SteLacca:
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By Tax Dragon
02nd Oct 2019 08:53

I disagree. I mean, I don't think the idea works (for the reasons Wilson gives), but I don't think this falls foul of GAAR (and wouldn't be self-assessing that it did).

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By Tax Dragon
02nd Oct 2019 08:55

Are IFAs subject to DoTAS?

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Replying to Tax Dragon:
Psycho
By Wilson Philips
02nd Oct 2019 09:09

If not, they darn well should be.

Thanks to you and Stelacca for the comfort. I was really only looking for backup to put under the nose of my client and his IFA.

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By ireallyshouldknowthisbut
02nd Oct 2019 09:53

What is it with IFA's and their apparent wealth of tax knowledge that turns out is about as much as my pension product knowledge. Ie I know the basics, but am quickly out of my depth.

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Replying to ireallyshouldknowthisbut:
Psycho
By Wilson Philips
02nd Oct 2019 10:11

Lawyers are better, but not by much

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By Clinton Lee
03rd Oct 2019 09:55

I'm not a tax expert but it doesn't look like the sale of asset transaction is eligible for Entrepreneurs Relief.

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